Prem Khatri: Tell us about your business and revenue model?
Prathit Bhobe: We run a wealth management business within ICICI Bank. Over the last five years, we have changed our approach. Earlier, there was no client segmentation. Now, we have segmented our client base. So different client segments are managed by different teams. Our challenges are similar to the challenges faced by our peers. So we try to deepen the relationship with the customers that we manage.
Prem: What part of your revenues comes from non-banking products?
Prathit: That’s grown on a yearly basis. It’s not as large as we do on the investments side but the good part is it’s fairly substantial now.
Hrishikesh Parandekar: In Ambit, I oversee NBFCs and wealth management space. We have an interesting set of propriety products in the alternate assets space. Our focus is clearly on the HNIs and family office business. We do not want to limit ourselves to a few asset classes. We want to differentiate ourselves in terms of the quality of products offered by us.
Prem: What kind of clients do you target?
Hrishikesh: We look for a minimum ticket size of Rs. 1 crore and we focus largely on business owners.
Soumya Rajan: Waterfield advisors works with family owned businesses. We run two verticals - multi-family office and corporate advisory desk. This is because the client segment we are catering to is business owners and entrepreneurs. We work with 30 different families across the country.
Prem: There is an increase in the number of wealthy people in the country. But it doesn’t seem to be getting captured in the assets under advisory of wealth managers. Why is that so?
Prathit: We have always had traditional wealth. Over the last decade, we have seen growing number of new wealthy individuals. Most of this wealth is being managed by banks and institutions. But, I think it’s really the legacy wealth or old wealth that has started getting exposed to the wealth managers. To that extent, I think we are definitely seeing a transition. The other reason is the fascination of that fraternity with hard assets and gold is something which institutions like us will not deal with. This is the reason why we typically see divergence between the wealth held by families and the assets managed by institutions like us.
Prem: Nilesh, you’ve been on both sides. Why is it that a lot of this wealth is not coming in financial services sector? What needs to be done?
Nilesh: Firstly, there is a parallel economy and that wealth will never come into the official accounts. In the MF industry, only 500 agents get more than Rs. 5 lakh annually by selling mutual funds. So, unless you create a pull, how will the push come?
In many institutions, wealth management has become transactional. Most of the clients whom I’ve met complain about the churn in RMs. Banks will have to create a system where RMs stay for a longer period of time.
The wealth in India is actually in the hands of people who are more than 45 years of age. This segment is more accustomed to physical touch rather than process or system touch. There are host of CFOs, CAs who are able to do the job of wealth manager without being recognized as a wealth manager. They are not recognized by SEBI, NSE or AMFI. So we require a transition where professionals start taking over from the immature, stability of professionals in the organization, processes taking over people and the parallel economy getting integrated into the official economy. This will perhaps help the wealth management industry to take off.
Soumya Rajan: We did a study on asset allocation and the returns over 5-year rolling period which showed that real estate delivered the highest and maximum returns. Thus, investors are going to chase asset classes that offer the highest returns.
Hrishikesh: In the Karvy Wealth Report, we found that hard assets account for a substantial chunk of HNI wealth. Even in financial assets, a big chunk is in two categories - bank deposits and illiquid promoter equity holding and that would account for two-third.
Prem: How do you go about acquiring clients at Ambit?
Hrishikesh: This is the biggest challenge. We try to leverage connectivity across our multiple businesses to get referrals. We recently showed investors how to invest in Uber directly. We were the only institution to show this. It is an interesting investment opportunity. So we will continue to do such things. Apart from references, we will keep providing unique opportunities to investors.
Prem: How do you segment your market? What is your approach?
Prathit: Being a bank, we have a lot of data at our disposal, so we have segmented on parameters like salaried, self-employed, professionals, entrepreneurs, and so on. We have ensured that there is a good mix which is given to each RM. The RM then is supported by an investment advisor or business banking advisor.
Prem: There is huge dearth of talent in India. Where do you get so many people managing wealth?
Nilesh: In a country like India, people say that they have limited talent. The problem lies with the manufacturers rather than with the employees. People can be trained. For instance, there is no institute for distributors. So, people will keep complaining that there is a lack of talent but the blame lies on us. To some extent, distributors are also at fault. So the industry needs to invest in training and development of its employees.
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